Christie Regulatory Czar Given The Power and Tools To Rollback Environmental and Public Health Protections

Although reported favorably in the press as a benign and policy neutral effort to impose a 90 day “time out” and form a “Red Tape Review Commission” to review State regulations to promote economic development, the Orders are not policy neutral and represent a radical departure from NJ’s policy, legal, and political traditions.

Regulatory Czar Lt. Governor Guadagno

They consolidate enormous regulatory power in the newly createdLt. Governor’s Office, which raises constitutional separation of powers issues between the Governor and the Legislature (and are the Lt. Governor’s decisions to suspend rules subject to judicial review? If so, on what kind of administrative record?).

Perhaps even more significantly, the Orders fundamentally change the process, standards, and criteria for adopting regulations. The Lt. Governor is given powers to work behind closed doors and block regulations in a way that is sharply at odds with the due process, transparency, and public participation requirements of NJ’s Administrative Procedures Act. This unaccountable power literally invites abuse by private interests.

The Lt. Governor is given powers to change decision standards and gut laws enacted by the Legislature that delegate powers to State Departments, like DEP, to protect the public’s interest in the environment, not necessarily promote the narrow private business interests of friends of the Governor.

I will focus on Executive Orders #1 and #2 to elucidate how they pose an unprecedented and enormous threat to public health and environmental protections that, according to a recent poll, are strongly supported by 79% of NJ residents.

Governor Christie has created a Regulatory Czar in the Lt. Governor’s Office. Ironically, very similar moves under the Obama Administration have drawn sharp public criticism (and at least Obama Czar Cass Sunstein is a serious legal scholar well versed in regulatory policy, while Guadagno is a local Sheriff with no regulatory experience).

Cass Sunstein would not seem the kind of presidential appointee to get liberal groups up in arms. A professor at the University of Chicago Law School (and this year a visiting professor at Harvard) and prolific author, Sunstein is a reliable liberal on most questions of law and policy. So when President Barack Obama chose his old friend for a very powerful Washington job, director of the Office of Information and Regulatory Affairs (OIRA), it seemed safe to assume that the appointment would be treated as good news by the environmental, labor and consumer groups that have been in despair for most of the Bush years.

The reaction, however, was much more muted. Since Sunstein is expected to be easily confirmed by the Senate, few people are willing to go public with criticisms. But “extremely disappointed” is how one person describes the general reaction among liberal advocacy groups at the prospect of Sunstein becoming what many call the “regulatory czar.”

The reason is Sunstein’s support for cost-benefit analysis, the practice of examining regulations to ensure that their benefit to society outweighs whatever costs they impose. Liberal advocacy groups claim that cost-benefit analysis has been a weapon that every Republican President since Ronald Reagan who created OIRA – has used to thwart effective government regulation of the environment, workplace and consumer safety. OIRA, after all, examines all proposed federal regulations before they take effect – be they issued by the Environmental Protection Agency, the Food and Drug Administration or the Occupational Safety and Health Administration – and it has the power to delay or reject the ones it believes will be too costly to impose. “Every time the agencies come out with a regulation that’s controversial, OIRA tries to stop it,” says Rena Steinzor, president of the Center for Progressive Reform, which in January issued a report critical of Sunstein’s support for cost-benefit analysis. “And their main tool is cost-benefit analysis.“

And just like the Czar-like powers Sunstein will wield in OIRA, Section 5 of NJ Governor Christie’s EO #1 provides

No later than 10 days after the effective date of this Executive Order, the head of each State agency shall transmit to the Lieutenant Governor:

a. Notification of any proposed administrative regulation or rule that should be suspended in addition to the proposed administrative rules set forth in Section 1 of this Executive Order. The Lieutenant Governor may, following such notification, suspend the proposed administrative regulation and rule;

1. For immediate relief from regulatory burdens, State agencies shall:

[a.-c.]

d. Employ the use of cost/benefit analyses, as well as scientific and economic research from other jurisdictions, including but not limited to the federal government when conducting an economic impact analysis on a proposed rule.

Last February, in a legislative proposal to reduce power plant emissions, the U.S. Environmental Protection Agency (EPA) suggested that the economic value of saving the elderly from early death caused by air pollution was less than that of saving healthy adults. Two cost-benefit analyses for the rule, known as the Clear Skies initiative, were presented by the agency. A base analysis without the so-called “senior discount” yielded benefits of $93 billion. But an alternative analysis in which this age-adjusted factor was applied produced a much lower benefit of just $11 billion, barely twice the cost of the program. According to Reece Rushing, a policy analyst with the Washington, D.C.-based public interest group OMB Watch, health-protective regulations may not be adopted if benefits appear low relative to cost.

The backlash against the senior discount was swift and severe. Advocacy groups, religious organizations, and critics including former EPA administrator Carol M. Browner blasted the agency, charging that it had undervalued aging Americans in its benefits calculations.

Under fire, the EPA withdrew the alternative analysis in May. But while the senior discount may have been shelved for now, cost-benefit analysis for environmental rule making under the Bush administration remains controversial.

At the core of this issue is the growing influence of the White House office with responsibility for cost-benefit review: the Office of Information and Regulatory Affairs (OIRA), within the Office of Management and Budget (OMB). Traditionally, OIRA has had fairly minimal interactions with submitting agencies as they prepare cost-benefit analyses. But under its current administrator, John Graham, OIRA has become intimately involved in all aspects of the cost-benefit process.

But, in addition to seeking to gut regulations by use of cost benefit analysis, Christie goes even further to weaken and dismantle NJ State regulations. EO #2 mandates that future NJ rules be rolled back to minimum federal standards Because existing rules sunset on a 5 year schedule, the new federal standards policy effectively applies to all rules.

This is extremely poor policy. Historically, NJ State regulations have been significantly more stringent and protective than federal minimums. More stringent protections are made necessary by NJ’s tremendous environmental challenges and chemical/industrial legacy.

Despite these overwhelming challenges that have justified and dictate stricter NJ state regulations, Christie has quietly reversed 30 years of NJ’s environmental leadership in one paragraph in EO #2, which provides that each state agency (i.e. DEP) shall:

2. e. Detail and justify every instance where a proposed rule exceeds the requirements of federal law or regulation. State agencies shall, when promulgating proposed rules, not exceed the requirements of federal law except when required by State statute or in such circumstances where exceeding the requirements of federal law or regulation is necessary in order to achieve a New Jersey specific public policy goal. [...]

3.b. Adopt federally promulgated rules as written, unless separate State rules are permitted and appropriate to achieve a New Jersey specific public policy goal.

These restrictions provide new and effective procedural opportunities and substantive criteria for builders, developers, and industry to challenge and attack any DEP regulations, while at the same time will make it very difficult if not impossible for DEP to justify necessary regulatory protections.

We hope the NJ environmental community and the media get engaged and cover this highly significant and newsworthy issue.

What these potential discussions fail to outline are the multiple layers of environmental regulation that have been implemented to develop in this State. There has to be a balance between conservation (not preservation) and development and the NJDEP has taken that balance more towards the preservation action. This is the most affluent State in the Union and is the most mismanaged State, where a simple development application takes nearly two years to get approved. It starts with the local authorities and climbs up to the NJDEP…and many wonder why we are the least desired State for business.

The NJDEP has been mismanaged for years, inconsistencies in the review process from one employee to the other has made the development process a puzzle. The State needs to step in and reform the Agency, maintain the intent of the Agency and move on. The outside influences and environmental advocacy groups have to work together with developers, not halt development as they have done. I ask all of them to look at the home they live in, the commercial properties that they use and question what life would be like without these amenities. The NJDEP and growth of NJ can work together, it can be successful and until this happens, this State will never thrive to be the best in the Union ever again.